The difficulty with comparing service charge costs between individual blocks of flats might be explained by considering in many factors. The method of calculation may differ for every block in line with any variance in leasehold arrangements. The property size, type, height, condition, age, service facilities, plant, lifts, equipment and lease particulars can all use a significant influence on the maintenance and running costs. In addition, the maintenance and repairs background and sinking fund provision could also vary considerably making comparisons from the degree of freehold service charges very difficult. Not only will the freehold property as well as condition be unique, nevertheless the property services necessary in managing and the building may be quite different combined with the requirements of the property lease.
In summary you should not compare apples with oranges and in some cases you can probably find good reasons for just about any two landlord service charges being different. Here are some possible explanations which can be applicable in comparing one typical block management scenario with another.
(i) You may have a more comprehensive list of services funded using your service charge (e.g. site manager or porter, all windows cleaned, lifts, auto parking, entry systems etc.).
(ii) Does your neighbour's service charge include sinking funds to allow for future repairs and maintenance? If not, their charge probably will fluctuate dramatically from year to year as large expenditure falls due. Large items may be charged for separately as and when they arise being additional to the regular landlord service charge.
(iii) How many individual flats are in the neighbouring building? Smaller blocks of flats with less units tend to possess a higher maintenance charge per unit. Overall maintenance pricing is often disproportionately more costly in which the charges are shared by fewer lessees. If service charges are spread across a lot of flats it makes sense that the proportion for each leaseholder is going to be less. For example, a roof repair provided for only 6 flats is expensive when compared to same facility provided for 32.
(iv) Do you have extensive gardens or perhaps is your block an older building? If so, your service charge could be adversely affected. The presence of asbestos for example can have a very dramatic effect on the costs associated with a works being completed.
(v) What size is your apartment? The method of service charge calculation needs to be stated in the property lease. It could be apportioned by experience of the bottom division of your apartment. If you own a couple bedroom apartment plus your friend owns a studio apartment than the can certainly produce a significant difference. Some leases simply share all costs equally which can clearly modify the portion payable quite significantly from block to another location.
(vi) The location and access arrangements to carry out works can also affect service charge. Where service contractors can't erect scaffold, or accomplish their works inside a cost-effective manner more time and costs will result. Difficulties with materials deliveries, parking, craneage, disposal of rubbish etc will all come with an affect whereas simple standard procedures without having special requirements is not going to attract reduced.
Having checked your lease as well as the other matters described above, you might still consider you might be being overcharged. As a long suffering leaseholder there are many of possibilities. Why not consider asking your landlord to employ a professionally qualified property managing agent. If you insist which a firm is appointed that is Regulated by RICS (The Royal Institution of Chartered Surveyors) the service standards they have to work to are set out in the RICS Code. This Code serves to protect clients from unscrupulous practices and likewise requires auditing and protection measures are put in place being at the mercy of regular inspection through the institution.
Other options could also be available to disgruntled leaseholders including using their Right to Manage or indeed Enfranchisement in which the freehold may be purchased by a majority with the lessees. However these alternatives usually are not always possible and may devote some time requiring the co-operation of others to initiate. Whatever option would be to be found, I trust the above will serve as being a useful point of experience of help people who feel they may be subject to overcharging.
I give further explore the subject of Enfranchisement along with the Leaseholders' Right to manage (RTM) in a separate article as this particular rights are important and warrant specific attention and explanation.
It is naturally prudent to look into all from the above matters either before or during the time of purchasing a leasehold property in a block of flats. Generally the management and maintenance costs will tend to be reflected in the service charge from a property over a period of years. A conveyancing solicitor should request these records of their investigation and search while using freehold block management agent. Please be aware however that this opportunity and procedures involved will probably vary on location. The procedures described give full attention to England and Wales and therefore are therefore not applicable to other countries.
Additional service charge advice and support could be purchased from a great block management agent providing residential freehold property services for blocks of flats. Readers are encouraged to search for block management agent services which are benchmarked for the quality standards determined by The Royal Institution of Chartered Surveyors (RICS). These professional practices or management agents benchmark their house services to the RICS Service Charge Residential Management Code. that has been approved from the housing minister last year.
RICS Chartered Surveyors that happen to be 'Regulated by RICS' must abide by this code which can be rigorously enforced by the RICS which does regular inspections with their member firms.
Regulation also secures a number of other benefits for freehold management companies, landlords and leaseholders. Service charge monies has to be safely managed inside a secure ring fenced client checking account with funds being insured and susceptible to regular checking and bank reconciliation. In addition the skills provided must attain the required standards Typical block management agent duties are covered beneath the RICS Service Charge Code which would usually include some with the following:-
Effective Procedures for Property Maintenance and Repairs,
Responding to Leaseholder Enquiries from Solicitors on Property Sales,
All Aspects of Service Charges comprising Financial Control, Expenditure, Budgeting, Service Charge & Ground Rent Collection and Accounting,
Regular Client Reporting to Freehold Management Companies, Residents, Lessees, RTM's or Landlords.
my latest blog post and Compliance Procedures in Upholding the Covenants from the Property Lease and
Company Secretary Services in Assisting Freehold, RTM and Property Management Companies with Essential Management Company Administration.